Five best ways to reduce chargebacks in e-commerce
What are chargebacks? This is a question that is familiar to most individuals dealing with e-commerce. Chargebacks are the bane of every online retailer’s existence. They put a major dent in your pocketbook and can cause you serious, long-term damage. Chargeback fees typically run around 20 dollars to 100 dollars, but many banks tack on an extra processing fee of up to 15 dollars. Chargebacks due to fraud are even more costly. Not only can they result in fees, but chargeback fraud will cause your account to be permanently closed. If you’re losing sales because of recurring chargebacks, it’s time to put a stop to it. Here are five strategies to help you keep the bad guys at bay and protect your business’s bottom line.
- Require Strong Authentication
Begin with the basics: strong authentication. If your customer doesn’t have to log in to make a purchase, it will be much harder for them to dispute the transaction if something goes wrong. It’s no secret that passwords are easily hacked and stolen, so don’t make your customers remember another one. Use two-factor authentication, in which your customer must use not only a password but also something they have on them, like a cell phone or token generator, to make a purchase. Make sure this is an option for every single shopper on your site. It is one of the most used tactics for chargeback prevention.
- Have Great Customer Support
Great customer support is essential for reducing chargebacks. Be sure your customer support is available throughout, not just during business hours. It will help if you also had a live chat on your site if customers are looking for answers to their questions right when considering making a purchase. Great customer support will help you provide shoppers with immediate answers to questions about items they want to buy, shipping information, and other details. It can also help prevent two of the most common reasons for disputes: non-delivery of goods and services and buyer’s remorse.
- Avoid Re-Billing
Some retailers mistakenly re-billing customers who return items under warranty, forgetting to remove these charges from their billing cycle. It may create grounds for a chargeback since the customer may allege that they were double charged or billed in error. To prevent this from happening, be sure that you update your system to reflect any returns or exchanges and that your customer service reps are aware of it too.
- Use an Effective Fraud Management Solution
Are you suffering from high rates of fraudulent orders? If so, it’s time to look into using an effective fraud management solution. Unfortunately, these tools can help reduce counterfeit credit card use instances and tend to go hand-in-hand with chargebacks.
- Prevent Fraud Before It Occurs
Preventing credit card fraud before it occurs is the best way to reduce your chances of suffering from chargebacks and other online business problems. Once your site starts gaining traction, there are paid tools that can help stop fraudulent activity before it starts and thus, protect your legitimate transactions in the process. For example, suppose the same email address or physical address keeps popping up in orders associated with fraudulent activity. In that case, you may want to block future orders from being placed in those locations. Whatever you do, please don’t ignore the problem, or your business may suffer because of it.
Each of these tips will help you prevent chargebacks in e-commerce and keep your bottom line growing. It’s just a matter of picking one or two that will have the biggest impact on your business and getting started on them.